Budget 2021: Effect on Renewable Energy for Atmanirbhar Bharat

As solar energy, we already know that there are massive opportunities to gain benefits. Looking at conditions in 2020 due to COVID-19, central/state regulatory level issues lead to unproductive outcomes in this industry. But we cannot deny that Indian Renewable Energy space will undoubtedly be an attractive opportunity in the 2021 and future.

However, to meet the investments needed for the 2030 target, right policies and right instruments need to be introduced.

India plans to achieve 60% of its installed electricity generation capacity from clean energy sources by 2030 to succeed 450GW of installed renewable energy generation capacity.

In 2021 the central also favourable tax, fiscal, financial and regulatory policies and incentive plans in the renewable energy industry.

SolarSmiths has noted below some suggestions and advice below which can help you understand regulation, tax and finances.  

1.REGULATION

• Ensure stable policies in both state and central levels such as upgrading intra-state transmission work, allocate more funds in T&D, privatization of systems.
• Ensure withdrawing net metering over 10 KW load for any user
• Plan to remove transmission surcharge and subsidy charges allowing single window system
• Virtual PPAs plan to be authorized by CERC as they are bilateral and should not be considered derivatives.
• Should plan to promote renewable-solar integrated battery energy storage systems which can also help renewable energy and in the growth of off-grid or micro-grid projects.
• Make BESS mandatory with infirm power, end-use linked exemption of customs duty on import of Lithium-Ion batteries and many more advantages.

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2.FINANCING

• The government should initiate independent class as priority sector lending
• Should direct more lenders with separate limits for funding RE projects in India at affordable rates
• DFI and PSU banks should increase green bonds and collaborates with high financial institutes for long term funds at approachable rates
• The government should drive required policies for proper funding in RE related projects
• It should increase the funding limit for rooftop projects to 100 crores compared to present 30 crores.
• The government should encourage promoting favourable Infrastructure Investment Trusts and regulations to extend a help IPPs retire RE project debts in existing projects.

Also Read: What is Solar Module? Types of Solar Modules

3.TAXES

• The government should extend the BCD exemption on import of modules for another five years. Hence it will help bridge the supply-demand mismatch in modules
• To encourage make in India initiative government should provide interest subvention on loans, exemption on import duties, subsidize R&D, fiscal subsidy and other tax concessions
• The government should stop the withholding tax on both Rupee and Dollar denominated ECBs for 3 years and more, to 5 % only.
• Should retain GST rates on renewable projects at 5 per cent.
• It should universally extend the renewable applicability of indirect tax incentives to all the states.
• As the project costs high in renewable energy projects, the government should permit the use of Compulsorily Convertible Debentures (CCDs).

Union Budget of renewable energy has announced infusion of funds in the solar and power sector, a few more targeted measures would have worked better. If implemented effectively, the Indian solar market will gain in the long run from the measures announced this year.

We earnestly request the central and state government finance minister, and administrative authorities to kindly consider the above suggestions and implement them for a productive future of our country.